Marrow-derived mesenchymal stem cells (MSC) are the osteoprogenitors that are sequestered in the endosteal compartment. Extracellular mediators, such as growth factors (BMP; FGF) and hormones (PTH; vitamin D; leptin), are involved in maintaining the quiescence and regulating the proliferation, fate determination, and differentiation of MSC. Recent studies also support extracellular matrix (ECM) proteins as determinants of MSC physiology. For instance, thrombospondin-2 (TSP2), a trimeric, multi-domain ECM protein, acts in an autocrine loop to limit MSC proliferation. Thus, TSP2-null mice have an increase in MSC number and an increase in endosteal bone formation. Preliminary studies have shown that in addition to acting as a inhibitor of proliferation, TSP2 may also inhibit the differentiation of MSC to adipocytes (AD) and promote osteoblast (OB) differentiation. In specific aim one will study whether the effects of TSP2 on differentiation are independent of proliferation by using various truncated recombinant TSP2 proteins and by examining differentiation of growth-arrested MSC. In the second specific aim AD transcriptional events in the presence of exogenous TSP2 will be studied and the ability of TSP2 to directly activate osteocalcin gene transcription will be explored in MC3TE1 cells carrying an osteocalcin-promoter luciferase construct. The long-term goal of this research program is to identify and fully characterize ECM proteins that influence MSC proliferation and differentiation. We anticipate that the experiments described herein will provide pilot data to guide more extensive in vivo experimentation.